One Of The Decade's Biggest Winning Stocks

| About: The Priceline (PCLN)

After underperforming the market for the last year, (NASDAQ:PCLN) is finally coming back into favor. I featured the stock on my daily radio show recently-here is why.

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PCLN's headquarters are in Norwalk, Connecticut, and as many of you are probably aware, its website offers flights, hotels, rental cars, cruises, etc. All you have to do is go online and name your own price-you might get it, or you might not!

On its way to today's current market capitalization of $40 billion, Priceline became one of the biggest winning stocks of the last decade.

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Believe it or not, Priceline has performed almost as well as Apple!

What has Priceline's stock done for investors over the past 10 years? It has delivered a whopping average of 40.7% percent per year over the past 10 years. During that same period of time, the S&P 500 has delivered 5.7% per year, while Apple has delivered 47.9%.

But what have you done for shareholders lately Apple? Not much, that is why I sold it months ago at $637.

Over the last five years, Priceline has delivered 43.1% per year while the market has only dealt 3.4% average gains.

Over the last three years, the stock has averaged 60.6% per year. The market has averaged 14.8%.

As you can see, Priceline has been underperforming the market over the last 12 months however.

When I compare the short-term, intermediate-term, and long-term performance of the stock against the other 3,400 other stocks that I rank on a daily basis, Priceline gets a performance grade of A+.

Priceline's short-term momentum grade has risen to B+. This shows up in nicely in a one-year chart of the stock. Priceline has recently broken out of a three-month consolidation and is breaking out to new, all-time highs.

Many investors assume that an $800 stock is expensive. I have seen $3 stocks that are much more expensive than an $800 stock. $800 may be the price you will have to pay to buy a share of Priceline, but what we need to do is take into consideration how many times earnings we are paying for these shares.

This is a much better way of judging the price or valuation of a stock.

Data from Best Stocks Now App

PCLN is trading at 17.45 times forward earnings. We can compare PCLN's forward PE ratio with the future anticipated five-year annual average growth rate. The analysts have that pegged at 15.1 percent per year. In other words, the stock is currently trading at a discount to its growth rate.

This gives the shares a PEG ratio of 1.16.

I love a stock that has superior performance, but I also like value. I have seen too many performance stocks come back down to earth real quickly because of very high valuations. This bull market is now over four years old. This is not a time to be paying up for stocks.

I begin with Priceline's current earnings estimates of $45.39 per share (yes this not a misprint) and extrapolate them out by 15.1% per year over the next five years. I then apply a multiple that I believe is appropriate for the shares.

I come up with a five-year target price of over $1600 per share. Yes, there are a lot of what-ifs and variables along the way, but stocks trade on expectations. I currently give Priceline a value grade of "A."

Priceline passes the performance test, value test, and the stock chart looks great! What more do you want? Out of the almost 3400 stocks that I rank daily, Priceline comes in at No. 28 overall. I try to only focus on the top 300 or so.

Priceline is back and in favor once again.

Data from Best Stocks Now App

Disclosure: I am long PCLN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.